HEAD-TO-HEAD: Investec versus JP Morgan

123456

Source: FE Fundinfo. Three-year cumulative returns in US dollars.

Performance

There is a clear winner in terms of performance.

The JP Morgan product has out-stripped the Investec product for each calendar year since 2014, and it cumulative return over three-years is 23 percentage points higher. Its medium term performance is also better than the MSCI Asia ex-Japan Index and the sector average, according to FE Fundinfo data.

“The JP Morgan fund does well in both up and down markets,” said Ng.

“The main reason for its outperformance is its focus on growth stocks, which have been boosted by the liquidity available in the Asia-Pacific markets since the end of the global financial crisis,” he explained.

“Not only that, the fund managers – Joanna Kwok with Mark Davids — and their team of analysts – have been adept at stock selection,” he added.

“This has been especially the case in their China choices, and their preference for large cap stocks,” said Ng, who highlighted the fund’s significant weighting (7.5%) to Tencent in contrast to Investec’s low allocation (2.9%) to demonstrate the contrast between the funds’ selections.

Furthermore, the JP Morgan fund has benefited from its outsized exposure to the financial sector, with a 10 percentage point overweight compared with the index, according to Ng.

“The managers’ choices in India and Indonesia, such as HDFC and Bank Central Asia, have been particularly profitable,” he said.

Investec’s performance has also suffered from its high exposure to Hong Kong-listed shares, especially this year as other investors retreated from the market during the five-month long political protests.

The fund still has an 18.4% weighting to Hong Kong, according to its 30 October factsheet, compared with a 10.7% weighting in the index.

In addition to its top-five holding in Hong Kong-listed insurer AIA, the Investec also has significant allocations to CK Hutchison (2.8%) and Ping An Insurance (2.5%).

The Investec fund is slightly less volatile than the JP Morgan fund because of its tilt towards value stocks, but in terms of risk-adjusted returns the latter is superior, with an information ratio 1.47 compared with 0.25 for Investec, according to FE Fundinfo data.

Discrete annual performance

 Source:  FE Fundinfo. Annual returns in US dollars.

123456